What is the main purpose of demand forecasting in logistics?

The primary purpose of demand forecasting in logistics is to predict future customer demand and optimize inventory levels. Accurately anticipating customer demand allows businesses to adjust their inventory management strategies accordingly, ensuring that they have the right products available at the right time. This forecasting helps companies minimize excess stock, which can lead to increased holding costs, while also preventing stockouts, which can result in lost sales and dissatisfied customers.

By understanding demand patterns, companies can make informed decisions related to production, sourcing, and distribution, leading to enhanced operational efficiency and improved customer satisfaction. In essence, effective demand forecasting aligns supply with demand, ultimately contributing to better resource utilization and financial performance.